Not necessarily. It's better to keep a realistic amount of rainy day fund and then the rest of the money can go towards house loan overpayment. It makes more financial sense when the house loan interest rate is higher than savings interest rate.
I would to have at least 12 months rainy day fund. I don't mind to have 6 months only if the house loan can easily withdraw my excess payment , in that case, I may dump my all my rainy fund into the house loan. Our house loans allow to do so.
Just little bit of rainy day fund. Not really sure how much i have. But usually i will save enough and sit down with the bank to re-calculate my house loan again (few yrs once). Trying to re-negotiate the BLR interest rate and slash off the principle sum.
Our mortgage/ house loan interest is calculated daily so it really benefits us if we pay more to reduce our capital/ principle sum. Since we got this mortgage/house loan for 2 years ago, we paid about £6k more than we have to so far. By doing so, we have reduced the terms by 6 months.
The thing is once we paid money into our mortgage/ house loan, we are not allowed to take it out again. So we are trying to be careful so that we don't want to end up in a situation where we make a lot of mortgage/ house loan overpayment but don't have enough savings when emergency arises.
Of course more months the better.
ReplyDeleteNot necessarily. It's better to keep a realistic amount of rainy day fund and then the rest of the money can go towards house loan overpayment. It makes more financial sense when the house loan interest rate is higher than savings interest rate.
ReplyDeleteI would to have at least 12 months rainy day fund. I don't mind to have 6 months only if the house loan can easily withdraw my excess payment , in that case, I may dump my all my rainy fund into the house loan. Our house loans allow to do so.
ReplyDeletemy hubby occasionally dump some money on the capital too, trying to get out from the mortgage asap >_
ReplyDeleteJust little bit of rainy day fund. Not really sure how much i have. But usually i will save enough and sit down with the bank to re-calculate my house loan again (few yrs once). Trying to re-negotiate the BLR interest rate and slash off the principle sum.
ReplyDeleteOur mortgage/ house loan interest is calculated daily so it really benefits us if we pay more to reduce our capital/ principle sum. Since we got this mortgage/house loan for 2 years ago, we paid about £6k more than we have to so far. By doing so, we have reduced the terms by 6 months.
ReplyDeleteThe thing is once we paid money into our mortgage/ house loan, we are not allowed to take it out again. So we are trying to be careful so that we don't want to end up in a situation where we make a lot of mortgage/ house loan overpayment but don't have enough savings when emergency arises.
our mortgage/house loan is calculated daily too which allow to take it excess money :p
ReplyDeleteWe have mortgages/ house loans similar to this in uk but they are not common. Their interest rates are higher so people don't go for them.
ReplyDelete